Wednesday, November 16, 2005 | The San Diego City Council on Tuesday approved offering developer Roque de la Fuente II a settlement for about half the amount a court awarded him in 2001 when it ruled that the city ruined his business park venture.
The city is aiming to pare down de la Fuente’s three lawsuits to one $50 million settlement, to be paid over 30 years, in hopes of closing the book on the prolonged legal quarrels that have spanned almost two decades.
“It’s a little disappointing that we have not been able to settle these cases because we think the city is using its resources the best we can, given its limited resources,” Executive Assistant City Attorney Don McGrath said. “We want to get this over with.”
The council unanimously approved proposing a settlement in closed session after conferring with Ret. Judge Lawrence Irving, who is acting as a mediator. The bid is a “best and final offer,” McGrath said.
A court ruled four years ago that the city owed de la Fuente $94.5 million for violating a 1986 agreement to develop the Border Business Park near Otay Mesa. De la Fuente said the municipal government blocked permit applications and imposed on the development unnecessary restrictions and inappropriate taxes, thereby devaluing his land.
De la Fuente only wants to settle on this lawsuit, leaving two more awaiting trial. McGrath said it would be in the best interest of both parties to settle all three suits at once, especially considering the city’s questionable financial stability.
De la Fuente said the city’s bad behavior still continues to this day, alleging – as an example – that the city has taken seven years to approve a permit to construct a bathroom facility at a truck stop his family owns in Otay Mesa. City offices were closed after de la Fuente made himself available to local press.
With interest compounding on the 2001 verdict, the city could be on the hook for as much as $120 million if that judgment is upheld. That case is currently in a state appellate court in Riverside and two related disputes are currently awaiting trial in San Diego Superior Court.
Vincent Bartolotta, de la Fuente’s attorney, said his client has been willing to settle for that amount to settle the Border Business Park case only, but that the two other cases need to be judged on separately.
Bartolotta said the timing of the city’s offer was an example of why it’s “impossible to work with the city.”
“They wait until the 11th hour to make an offer on what’s worth more than a $100 million and then try to sneak in two other cases that are totally separate,” Bartolotta said. “This is a perfect example of why the city’s in so much trouble.”
De la Fuente criticized the city for trying to lump all of his suits into one and for using the government’s budget problems as an excuse to win sympathy for a settlement. He said that the city had “a lot of interesting assets” that he would consider as payment. He suggested the city transfer parts of the Qualcomm Stadium lot to him in an effort to keep the Chargers in town, give him the air and water rights to Otay Reservoir or allow him to use his land for a new landfill. He also wants an apology.
“There are a lot of possible solutions that, when it’s done with positive people who have more than three fingers and a forehead, it could be a win-win for the de la Fuente family, a win-win for the lawyers involved who have spent a lot of years on this case, and a win-win for the citizens of San Diego,” de la Fuente said.
McGrath said it was “pennywise and pound-foolish” for de la Fuente to drag out the dispute any longer when the city is already strapped for cash.
“If you’re in a court of appeals and you can get 50 cents on the dollar, I’d take it,” McGrath said. “That case is not perfect and it could come back and they could get $50 million, $100 million or zero million.”
McGrath said the appellate judge’s ruling was unpredictable, but that if the city were ordered to make a large payment along the lines of the 2001 verdict that it could likely be made over a span of at least 10 years.
In addition to $50 million, the City Attorney’s Office told de la Fuente that, if he decided on a “global settlement of all litigation,” the city will consider extending the Border Business Park development agreement by 15 years and to change the zoning on de la Fuente’s properties so that he can develop for both residential and commercial uses.
City Attorney Mike Aguirre told de la Fuente and his attorney in a letter Tuesday that the settlement is on the table for 72 hours. McGrath said that the more important news is that the city is putting an offer forward after a virtual impasse between the two parties.
“We’re always here to listen, we’re a governmental entity and that’s our job,” McGrath said. “We think we’ve gone the extra mile, and we don’t think they have.”
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